USD/CHF palpable bearish tone below 1.0060, Trump fades

Currently, USD/CHF is trading at 1.0024, down -0.38% on the day, having posted a daily high at 1.0094 and low at 1.0014.

Lack of substance during Trump's speech and an empty US economic docket made the perfect scenario for another dollar sell-off. The USD/CHF currency pair traded above the water near 50-DMA, however, never found that extra stamina boost to break above it to resume its uptrend. 

To note, historical data indicates that the highest performance clocked at +0.58% (Jan.18) and its lowest at -1.05% (Jan.5).

The new US dollar era; Really?

Danske Research Team notes that this week could easily mark the end of the world as we know it. Its events are likely to set apart traditional economic and political global alliances that we have grown used to since the World War II. So far, the market is taking a relatively complacent view of the risk in the upcoming changes, with the VIX index (also known as the global fear index) trading close to a decade low. However, we think that the resetting and formation of new trade and economic alliances are typically complicated and could in our view entail significant risks to the global economic recovery, both in the short term and down the road.

Danske continues on two valuable subjects, "The inauguration of Donald Trump as US president is likely to mark a new era for US economic and foreign policies. We are already used to a new communication style through Twitter. More fundamentally, the new US administration points to a shift in US foreign and trade relations, with Trump reaching out to Russia, while taking a rather confrontational approach to China on both Taiwan and trade. Then, even US and European relations may become cooler, at least Trump's comments that the UK will not be the only country to leave the EU are unlikely to have gone down well with EU member states.

"Theresa May's Brexit speech on Tuesday served as a reminder of an intrinsically difficult period ahead for the UK and Europe. While the speech did not contain much news, it reminded us that the UK divorce from what can be described as a 33-year marriage of convenience with the EU is likely to be contentious and complicated. While risks are clearly on the UK side, the unity in the EU will also be tested, for example on how to deal with the lack of UK contribution to the EU budget, which accounts for 15% of all contributions. The EU budget is one of the most contentious issues in the EU. While the British pound rebounded after May's speech, we think it will come under pressure as triggering Article 50 comes closer, seeing the EUR/GBP moving to 0.88 in 3M."

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.0133 (50-DMA), 1.0180 (horizontal resistance level) and above that at 1.0246 (high Jan.11). While supports are aligned at 0.9960 (100-DMA), and below that at 0.9850 (200-DMA).

EUR/USD Forecast: uncertainty reigns, but sentiment keeps favoring the USD